Reform of Insurance Sector In 1933 Malhotra Committee headed by formed finance secretary and RBI Government R.N. Malhotra was formed to evaluate the India Insurance Industry and recommend its future direction.
The committee stated in its report in 1994 only 22% of the Indian Population was insured. The poor reach of insurance in the country and the sheer numbers make India a market with tremendous potential.
Per capital insurance premium in India is a mere US$6 one of the lowest in the world. In South Korea the corresponding figure is US$ 1338, in USA it is US$ 2550 and in UK it is US$ 1589.
Some of the Key recommendations of the committee include:-
Government stake in the insurance companies to be brought down to 50% All the insurance companies should be given greater freedom to operate. Private companies with a minimum paid up capital of Rs. 1 billion should be
allowed to enter the industry. No company should deal in both Life Insurance and General Insurance thought a
single entity. Foreign companies may be allowed to enter the industry in collaboration with the
domestic company. Only one state level life insurance company should be allowed to operate in each
state. Insurance companies must be encouraged to set up unit linked pension plan.
Object and Advantage of Life Insurance
Protection against risk of untimely death Life insurance is a product which offers protection against risk of death, in cash of death, the full sum assured is made available under a life assurance policy, whereas under other savings schemes, the total accumual savings alone will be available.
Protection during old age Life Insurance can also be used as a means of saving for one’s future. There are a number of Life Insurance Policies which in addition to life cover also provide the means of investing one’s income. The sum as per the policy will be received only after a period of time. This amount thus provide for old age.
Forced Saving Life Insurance brings about forced savings. Payment of Life insurance premiums is compulsory and become a habit. Savings in other schemes can be be easi easily ly with withdr draw awn n and and may may be used used for for less less wort worthy hy purp purpos oses es.. Termination Termination of a life insurance insurance policy by the policy holder usually results in a substantial loss in benefits under the policy o the policy holder. One is thus encouraged to save and keep one’s policy alive.
Education requirement and charity In certain cases, the object of insurance may be to serve as security to educational funds in respect of loans advanced for educational purposes or to provide donations to charitable institution like hospitals & schools.
Nomination and Assignment The Life Insurance can name the person or persons to whom the policy moneys would be payable in the event of his death. The proceeds of a life insurance policy can be protected against the claims of the creditors of the Life Insurance Insurance by effecting from creditors creditors except to extent of any interest in the policy retained by this by the insured.
Marketability and suitability for borrowing After a period of 3 years, if the policy holder fined that he is unable to continue payment of premiums he can surrender a policy for ac cash sum. A life insurance policy is acceptable as a security for a commercial loan.
Loan from the Insurance company A policyholder can take a loan form his insurance company against the security of his life insurance policy provided the term of his pllicy allow for such a loan. This loan can be taken usually after a period of 3 years from commencement of the policy and is a percentage of it’s surrender value.
Tax benefit The Indian income Tax Act provides tax concessions to the policyholder both on payment of premium and on the maturity amount.
Under Section 88, the assessees is eligible for a tax rebate of 20% on the premium paid by him (subject to maximum of Rs.60,000) on life insurance policies on his own life\ on the life of suppose\children-major of minor, including married daughters.
Under Section 10(10D), any sum receive under a Life Insurance Policy including bonus declared paid excluding annuities is exempt from tax.
Protection of family Members Under the section 6 of the Married Women’s Property Act of a Married man takes a policy of life insurance e on his own life and expresses on the face of it to be for the benefit of his wife and children, or any of them, then it shall be deemed to be a trust for the benefit of his wife, or his wife children, or any of them, according to the interest so expressed, and shall not, so long as any object of trust remains, be subject to the control of the husband; or to his creditors, or form part of his h is estate.
An insurance policy taken by a married man in the above manner is ideal way to protect the interest of his wife and children, even after his untimely death.
Role of Life Insurance:Risk and uncertainties are part of life’s great adventure - accident, illness, theft, natural disaster- they are all built into the working of the universe waiting to happen.
Role: -
Life Insurance as “Investment”
Insurance is an attractive option for investment. While most people recognize the risk hedging and tax saving potential of insurance, many are not aware of its advantages as an investment option as well. Insurance products yield more compared to regular investment option options, s, and this this is beside besidess the added added incent incentives ives (read (read bonuses bonuses)) offere offered d by insure insurers. rs.
You cannot compare compare an insurance insurance product with other investment investment schemes for the simple reason that it offers financial protection from risks, something that is missing in noninsurance products.
In fact, the premium you pay for an insurance policy is an investment against risk. Thus, before comparing with other schemes, you must accept that a part of the total amount invested in life insurance goes towards providing for the risk cover, while the rest is used for savings.
In life insurance, unlike non-life products, you get maturity benefits on survival at the end of the term. In other words, if you take a life insurance policy for 20 years and survive the term, the amount invested as premium in the policy will come back to you with added returns. In the unfortunate event of death within the tenure of the policy, the family of the deceased will receive the sum assured.
Role 2: Life insurance as "Risk cover"
First and foremost, insurance insurance is about risk cover and protection protection - financial protection, protection, to be more precise - to help outlast life's unpredictable losses. Designed to safeguard against losses suffered on account of any unforeseen event, insurance provides you with that unique sense of security that no other form of investment provides. By buying life insurance, you buy peace of mind and are prepared to face any financial demand that would hit the family in case of an a n untimely demise.
To provide such protection, insurance firms collect contributions from many people who face the same risk. A loss claim is paid out of the total premium collected by the insurance companies, who act as trustees to the monies.
Insurance also provides a safeguard in the case of accidents or a drop in income after retirement. An accident or disability can be devastating, and an insurance policy can lend timely support to the family in such times. It also comes as a great g reat help when you retire, in case
no
untoward
incident
happens
during
the
term
of
the
policy.
With the entry of private sector players in insurance, you have a wide range of products and services to choose from. Further, many of these can be further customized to fit individual/g individual/group roup specific needs. Considering Considering the amount you have to pay now, it's worth buying some extra sleep.
Role 3: Life insurance as "Tax planning" Insurance serves as an excellent tax saving mechanism too. The Government of India has offered tax incentives to life insurance products in order to facilitate the flow of funds into productive assets. Under Section 88 of Income Tax Act 1961, an individual is entitled to a rebate of 20 per cent on the annual premium payable on his/her life and life of his/her children or adult children. The rebate is deductible from tax payable by the individual or a Hindu Undivided Family.
ORGANISATION STRUCTURE
Type of Insurance Business
Insurance Business is divided in to Four Classes:-
•
Life Insurance
•
Fire Insurance
•
Marin Insurance
•
Miscellaneous Insurance
Type of Life Insurance •
Term Insurance
•
Endowment Policy
•
Whole Life Policy
•
Money Back Policy
•
Annuities & Pension
Term Insurance Policy:A term insurance policy is pure risk cover for a specified period of time. What this means is that sum assured is payable only if the policyholder dies within the Policy term. For instance, if a person buys Rs.2 lakh policy for 15-years, his family is entitled to the money if he dies within that 15-year period.
So, there is no element of savings or investment in such policy.
Endowment Policy:Combining risk cover with financial savings, endowment policies is the most popular policies in the world of life insurance.
In an Endowment Policy, the sum assured is payable even if the insured survives the policy term.
If the insured dies during the tenure of the policy, the insurance firm has to pay the sum assured just as any other pure risk cover.
A pure endowment policy is also a form of financial saving, whereby if the person covered remains alive beyond the tenure of the policy; he gets back the sum assured with some other investment benefits.
Whole Life Policy:As the name suggests, a whole Life Policy is an insurance cover against death, irrespective of when it happens.
Under this plan, the policy holder pays regular premiums until his death, following which the money is handed over to his family
Money Back Plan:These policies are structured to provide sums required as anticipated expenses (marri (marriage age,, educat education ion,, etc…) etc…) over over a stipul stipulate ated d period period of time. time. With With inflat inflation ion becoming a big issue, companies have realized that sometimes the money value of the policy is eroded. That is why with-profit policies are also being introduced to offset some of the losses incurred on account of inflation. A portion of the sum assured is payable at regular intervals. On survival the remainder of the sum assured is payable. o
In case of death, the full sum assured is payable to the insured.
The premium is payable for a particular of time.
Annuities And Pension:In an annuity, the insurer agrees to pay the insured a stipulated sum of money periodically. The purpose of an annuity is to protest against risk as well as provide in the form of pension at regular intervals.
Over the years, insurers have added various features to basic insurance policies in order to address specific needs of a cross section of people.
About IRDA
Composition of Authority under IRDA Act, 1999 AS pre the section 4 IRDA Act’1999, Act’1999, Insurance Regulatory Regulatory and Development Development Authority Authority (IRD (IRDA, A, with with was was cons consti titu tute ted d by an act act of parl parlia iame ment nt)) speci special al the the compos composit itio ion n of Authority.
The authority is a ten member team consisting of:-
(a)
A Chairman;
(b)
Five wh whole-time me members;
(c)
Four part-time members, (All appointed by the Government of India)
DUTIES, POWER AND FUNCTION OF IRDA
Section 14 of IRDA Act, 1999 lays down the duties, powers and function of IRDA…(1) subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and reinsurance business.
The power and function of Authority shall include:-
(a) (a)
Issu Issuee to the appl applic icant ant a cert certif ific icat atee of regis registr trat atio ion, n, rene renew, w, modi modify fy,, withdr withdraw aw,, suspend or cancel such registration.
(b) (b)
Prot Protec ecti tion on of the int inter eres estt of the poli policy cy hold holder erss in matte matters rs conc concer erni ning ng assi assign gnin ing g of policy, nomination by policy holders, insurable interest, settlement of
(c) (c)
insu insura ranc ncee claim claim,, surre surrend nder er valu valuee of polic policy y and oth other er ter terms ms and and condi conditi tion onss of insurance.
(d) (d)
Speci Specify fyin ing g requi requisi site te quali qualifi ficat catio ions ns,, code of conduc conductt and pract practic ical al trai traini ning ng for intermediary or insurance intermediaries and agents.
(e) (e)
Speci Specify fyin ing g the the code code of of cond conduc uctt for for surv survey eyor orss and and loss loss ass asses esso sors rs..
Function of IRDA
Promoting and regulating professional organizations connected with
insurance and reinsurance
Improving the efficiency while conducting the insurance business.
Determining the specifications of accounts and the manner in which funds
are invested.
Laying down prudential norms for investment for both life and general
insurance.
Mission of IRDA
To protect the interest of the policyholders, To regulate, promote and ensure orderly growth of the Insurance industry and for matters connected therewith or incidental thereto.
Life Insurance Players Private Players in Indian Insurance Market And it’s Foreign Collaborations Collaborations
Company
Birla Sun Life
Indian Partner
Aditya Birla Group
Foreign Insurance
Area
Sun Life Canada
Life
Kotak Life Insurance Kotak Mahindra Finance Old Mutual, South Africa
Life
HDFC Standard Life HDFE
Standard Life, UK
Life & Non-Life
ICICI Prudential
Prudential, UK
Life
ICICI
Max New Yourk Life Max India
New Yourk Life, UK
Life
TATA-AIG
Tata Group
AIG, USA
Life
ING-Vysya
Vysya Bank
ING Insurance, Netherlands
Life
Aviva
Dabur
CGU Life, UK
Life
Met Life India
Jammu Kashmir Bank
Met Life, USA
Life
Bajaj Allianz
Bajaj Auto
Allianz
Life & Non-Life
AMP Sanmar
Sanmar Group
AMP-Austrila
Life
SBI Life
SBI
Cardiff, France
Life
THE PARTNERSHIP
The Partnership About Old Mutual Mutual was established more than Old 150 years ago and has developed into an Intern Internati ational onal financ financial ial servic services es group group whose whose activi activitie tiess are focuse focused d on asset asset gathering and asset management. The Old Mutual Group offers a diverse range of financial services in three principal geographies: South Africa, the United stats and United Kingdom The company is listed on the London stock Exchange with a market capitalization of approximately $6 billion and is a member of the elite FTSE 100 index. index. In the 2003 ranking of the World’s World’s 500 largest largest corporation corporationss by Fortune magazine, Old Mutual climbed 87 places to position 366 and was also listed as the 14th largest company in the world.
Old Mutual is the largest financial services business in South Africa, through its insura insurance nce,, asset asset managem management ent,, bankin banking g and general general insura insurance nce operati operation. on. The company serves 4 million life insurance policyholders and employs over 13000 south Africans in its local operation.
In the USA ,Old Mutual is one of the top ten fixed annuity businesses offering an array array of specia specialis listt asset asset manage management ment skill skillss through through its 23asset 23asset manage managemen mentt business. The company’s US Life business record sales of $4 billion at the end of 2002.
Operations in the United Kingdom are focused on wealth management, through gerrard as one of the leading private client stock broking business in the UK.
Thee Old Th Old Mu Mutu tual al Grou Group p has has the the abil abilit ity y to cate caterr for for a vari variet ety y of cons consum umer er segments and offer a comprehensive and innovative and broking business in UK.
Change of Company Name OM Kotak Mahindra announces new company name as Mahindra Old Mutual Life Insurance Limited
New name to leverage Old Mutual’s international expertise and reiterate Kotak’s single brand commitment
Mumbai,July 6,2004:OM Kotak Mahindra Life Insurance Company Limited,one of the fastest growing insurance companies in India announced today that is has changed changed its company company name name to Kotak Kotak Mahind Mahindra ra Old Mutual Life Insura Insurance nce Limited. The brand will now be know as Kotak Life Insurance
In brand development move, the two-and half year old OM Kotak Mahindra Life Insurance Company, a joint venture between Old Mutual and Kotak Mahindra Bank, has pegged its brand name as Kotak Life after changing the company name to Kotak Mahindra Old Mutual Life Insurance.
We had failed to communicate to our customers properly with with our earlier name. It has not been easy for the customers to understand the meaning of OM ( Old Mutual) before kotak, said Mr. Shivaji Dam Managing Director, Kotak Life Insurance
Market Market resear research ch findi finding ng on the corporate corporate brand brand have shown that that while while the company ranked very high in awareness scores, old mutual Plc was not being associated with the word OM. The second change is the move toward a unified brand : Kotak
Product and Plans of Kotak Life Insurance
INSURANCE PRODUCT The insurance business is concerned concerned with the guaranteein guaranteeing g compensati compensation on in the event event of loss, loss, damage damage to proper property ty death. death. The presen presentt day insuranc insurancee of the prote protecti ction on is provid provided ed by the Life Life Insura Insurance nce Corpor Corporati ation on and the General General Insurance Corporation or other agencies pertaining to Life, fire and marine has its basic concept that the individual or groups or companies seeking protection must earn a surplus surplus over the cost of maintaining maintaining and then pay a premium premium out of the income. For this purpose, the insurance business is based on a mutual and basic desire to protect the loss of one’s property and loss due to the death of an individual.
KOTAK LIFE INSURANCE PRODUCTS Kotak is offering a wide range of products for its customer they all are divided in to different types. There are products for all types & kind of people this will give benefit to people in any stage of life & also after his death.
THERE ARE MAINLY 2 TYPES OF PRODUCT:
1) UNITIZED 2) UN-LINKED
PRODUCTS ARE DIVIDED IN TWO CLASS
1) PART PARTIICIPA CIPATI TION ON
2) NONP NONPAR ARTI TICI CIPA PATI TION ON
WHAT IS UNIT-LINKED PRODUCTS? Unit linked insurance plans (ULIPs) have become something of a rage with their promise of market linked returns combined with the dual benefit of insuring your life from eventualities.
To put put it simp simply ly,, ULIP ULIPss atte attemp mptt to fulf fulfil illl inves investm tmen entt needs needs of an inve invest stor or with with protection/insurance needs of an insurance seeker. ULIPs work on the premise that there is class of investor who regularly invest their savings in products like fixed deposits (FDs). Coupon bearing bonds, debt funds, diversified equity funds and stocks. There is another clas classs of indi indivi vidu dual alss who who take take insu insura ranc ncee to provi provide de for for thei theirr fami family ly in case case of an eventuality. So typically both these categories of individuals (which also overlap to a large extent) have a portfolio of investments as well as life insurance. ULIP as a product combines both these products (investment and life insurance).into a single products. This saves the investor/insurance-seeker the hassles of managing and tracking a portfolio of products.
Novels and noble as it appears, investor/insurance-seekers rarely understand the cost implications of the marriage between investment and life insurance. To be sure, it is intricate and not everyone is able to unravel it. ULIP are designed to put control in the hands of the customer. While some customers are comfortable with this, there are others who require some more explanation about the features. The insurance agent provides this. All the changes are clearly disclosed in the products brochures that are given to the customers. Moreover, the customer get a benefit illustration, which clearly illustrates the up-front investment and mortality charges that are levied on the premium, and shows how the money will grow overtime, under a certain set of assumptions.
INSURANCE PLANS
Kotak Endowment Plan
Endowment plans are among the most popular forms of insurance as they provide both insurance coverage and also act as a saving instrument. These are the plans wherein benefits are payable on death within term OR survival to maturity whichever is earlier.
KEY
FEATURES OF THE PLAN
Minimum Entry age: 18 years Maximum Entry age: 65 years Vesting age: Any age up to 75 years Term avail: 10 years-30 years
Premium paying mode: Quarterly: Rs. 1,560/Half-yearly: Rs.3, 060/Yearly: Rs. 6,000/-
KEY
BENEFITS OF THE PLAN 1. Limited Limited Premium Premium Payment Payment Option: Option: Though the the policy term term ranges ranges from 10 to 30 yrs, the client has the flexibility to pay off the premiums in limited term i.e. with in first few years of the policy. The benefit of the life cover would however be for the entire term of the policy. The premium can be paid in short period of 3,5,7,10 or 15 years.
2. Maturity Maturity Benefit Benefit – Sum Sum Assured Assured or Accumulati Accumulation on account whicheve whicheverr is higher. higher.
3. In the event event of unfortunate unfortunate death death – SA or or Accumulati Accumulation on Account whichever whichever is higher is paid out as death benefit.
Kotak Money Back Plan
Money back plans are special type of Endowment plans and are also called anticipated endowment assurance plans. Under money back plan, survival benefits are spread over the term of the policy i.e. certain percentage of sum assured is paid at regular intervals (say 5 years). Apart from the above death benefit continues like an endowment plan i.e. full sum assured shall be payable on death within the term irrespective of earlier survival benefits. This is why money back plan are costlier than the endowment plan of o f equal sum assured.
Key
Features of the plan
Minimum Entry age: 18 years Maximum Entry age: 60 years Vesting age: Any age up to 75 years Term avail: 15, 20 & 25 years
Premium paying mode:
Quarterly: Rs. 1,560/-
Half-yearly: Rs.3,060/-
Yearly: Rs. 6,000/-
Key Benefits of the
plan 1. The cover cover will will increase increase at the the rate rate of 7% per per annum of of the Basic Basic Sum Assured Assured after the first year. 2. On Death: Death: Sum assur assured ed less all the the premiums premiums due but but not paid paid or accumula accumulated ted Fund whichever is higher. 3. On Maturity Maturity:: The final final Survival Survival benefit benefit is payable payable as a percenta percentage ge of the Basic Basic Sum Assured 4. Tax Benefit: Tax benefit under sec. 80C & 10 (10D) of income tax act. 5. Surv Surviv ival al Payo Payout ut Stru Struct ctur ure: e:
Kotak Child Advantage Plan
Kotak Child Advantage Plan is designed and offered for the savings of your beloved children to care of future in terms of education & marriage.
Key Features of the plan Minimum Entry age: 0 years Maximum Entry age: 17 years Term avail: 10 to 30 years
Premium paying mode: Quarterly: Rs. 1,560/Half-yearly: Rs.3,060/Yearly: Rs. 6,000/-
Life to be insured: A child age between 0 to 17 years (lbd)
Proposer: The Proposer is compulsory on the policy. The proposer should be either one of the parents or the legal guardian and must be at least 18 years (lbd). Maximu Maximum m Sum Assure Assured d allowe allowed: d: Rs. Rs. 25,00,0 25,00,000/ 00/-- subjec subjectt to matchi matching ng life life
insurance on the proposer’s life (which would include both individual life policies and group life insurance policies on the life of the proposer). However insurance of Rs. 1,00,000/- may be granted on the life of each child without the proposer’s insurance.
Key
Benefits of the plan
The cover on the life of the child starts after 5 years of DOC or on the child attaining 18 years whichever is earlier.
On Maturity: Basic Sum Assured or Accumulated Fund whichever is higher is
paid.
On Death: If death occurs at or after age 18 years or 5 years or more years after
DOC, the death benefit is the greater of: Sum Assured less any premiums due but not paid or Accumulated Fund.
If Death occurs within 5 years of DOC and the life insured insured has not attained 18 years years of age then, the death benefit: All the premiums paid (excluding the rider premium) or the Surrender Value whichever is higher.
Riders available: Kotak Life guardian Benefit and Kotak Accidental
Disability Guardian Benefit.
Paid-up Value: Will be available on request after 3 full years premiums
have
been paid.
Surrender Value: Will be available after 3 years and will be based on
accumulated fund net of surrender penalty.
Loan: Available on after 3 years on % of surrender value.
Tax Benefit: Tax benefit under sec 80C and sec 10 (10D) of the income tax
Kotak Safe Investment Plan
Kotak Safe Investment Plan is an Investment cum Insurance plan, plan, which offers CAPITAL GUARANTEE with 80% equity exposure where money is invested in
capital markets and customer gets market-linked returns. All gains from the markets are yours to take and in case the markets do not perform well, you would still get back the Guaranteed Sum Assured with an in-built guaranteed return of 2.75%. 2.75% .
Key
Features of the plan
This plan offers a choice of four professionally managed fund s to invest your money. Bond fund……..(Corporate bonds) Gilt fund………..(Government securities) Floating Rate Fund…(Floating rate debt instruments) Balanced Fund….(Equity + Debt exposure) Growth Fund……(Equity exposure upto 80%)
•
Minimum Entry age: 18 years Maximum Entry age: 65 years Maximum age till plan can cover: 75 years Term avail: 10 years-30 years
Limited Premium Payment option to help you pay off your premiums over a short period of 3,5,7,10 or 15 years
Key Benefits of the
plan Premiums paid under the plan will qualify for deduction under Sec80C, and the
returns are fully tax-exempt under Sec 10(10 D).
Flexibili ility ty to switch switch from from one fund fund to anothe anotherr by fillin filling g “switc “switch h form”, form”, No Flexib charges to be paid for switching & No restrictions on number of switch during
the policy term.
On maturity - Sum Assured or Fund value whichever is higher is paid out.
In event of unfortunate death - Sum Assured or Fund value whichever is
higher is paid out as death benefit. Lump sum injection allowed. Minimum Rs. 10,000/-
The plan gives the option to withdraw money from the fund, through partial or
complete surrender of units after 3 years with 2.5% exit load.
Policy could be surrendered after period of 3 years.
(ACM) - applicable after 3 years if you miss Automatic Cover Maintenance (ACM)
out on paying premium. Policy does not lapse. Loan Facility available after 3 years on the 50% of surrender value
Kotak Flexi Life Li fe Plan
An invest investmen mentt cum insurance insurance plan that that can be custom customize ized d to meet meet you yourr consta constantl ntly y evolving needs. While on one hand it lets you decide the amount of insurance cover that you want, on the other hand, it invests a portion portion of the premium in the capital capital markets to ensure that your money works hard for you. At the same time the plan ensures that you have enough flexibility to meet your financial objective of savings and protection, both through this single plan. The plan gives you the option to add lump sum injections, when you want. And what’s more it offers you the flexibility to withdraw your funds in part or in full.
Key
Features of the plan
Minimum Entry age: 14 years Maximum Entry age: 65years Term avail: 5 years-30 years
Minimum SA2 (Risk Cover): 50,000
This plan offers a choice of four professionally managed fund s to invest your money. Bond fund………// Government bond, Corporate bond Floating Rate Fund…// Floating rate debt instruments Gilt fund………….// Government Securities Balanced Fund…// Equity + Debt Growth Fund… // Equity Exposure
Premium paying mode: •
Quarterly: Rs. 2,620
•
Half-yearly: Rs.5,115
•
Yearly: Rs.10,000
Limited Premium Payment option to help you pay off your premiums over a short period of 3, 5,7,10 or 15 years
Key
Benefits of the plan Flexibility to choose Investment and Insurance amounts.
Guaranteed maturity maturity sum assured assured on Investment, Investment, i.e. SA1 or Fund On Maturity – Guaranteed Value whichever is higher is paid out. o ut. In event of unfortunate death – SA2 + Fund value is paid out as death benefit. Opportunity to make lump sum injections, so that your surplus funds do not lie idle
in a savings account. Minimum amount of LSI – Rs. 10,000/ If SA2 is 50,000 then no medicals required & no riders will be allowed. In case of a financial emergency, you have the following options:
withdraw from the fund, through partial surrender surrender of The plan gives the option to withdraw units in 2nd & 3rd year with 50% exit load & after 3rd year with 2.5% 2. 5% exit load.
•
Policy can be surrendered after 3 years.
•
Paid Up option after 3 years
•
ACM - automatic cover maintenance facility available after 3 years
Value added riders like Accidental Death Benefit, Permanent Disability Benefit
Critical Illness Benefit, Life Guardian Benefit, and Accidental Disability Guardian Benefit. Loan facility available.
Kotak Easy Growth Plan What if a conventional insurance plan does not suit your needs ? Perhaps you
don’t want to have your money locked in because you don’t know when you will need funds or don’t even want to go through the trouble of regular premiums for a fixed tenure. The Kotak Easy Growth Plan gives you an opportunity not only to invest your money
in to different professionally managed funds but also gives 5 times life cover.
Key Features of the plan This plan offers a choice of four professionally managed fund s to invest your
money.
Bond fund………..// Government bond, Corporate bond
Floating Rate Fund…// Floating rate debt instruments
Gilt fund………….// Government Securities
Balanced Fund…// Equity + Debt
Growth Fund.. // Equity Exposure up to 80%
Aggressive Growth Fund… // Equity Exposure up to 100% 1 00%
Minimum Entry age: 0 years Maximum Entry age: 75 years Term: Whole Life
Single Premium Policy Minimum Premium: Rs.50,000/-
Death Benefit: Kotak Easy Growth Plan offers you two options for choosing a death benefit.
Option 1: With 5 times Life cover (Maximum age for five times cover is 60years) Option 2: With 1.02 Times Life cover: (No Medical test required.)
Key Benefits of the
plan
Premium paid under the 5 times cover option will qualify for deduction under Sec.80C , and the returns are fully tax-exempt under Sec 10 (10 D).
Premium paid under 1.02 times cover option will qualify for deduction under Sec.80C, Sec.80C , but Sec 10 (10 D) will not be applicable and hence returns will be taxable.
Lock-in period - 1 year. 100% withdrawal w ithdrawal of the fund value from 2nd year onwards
In event of unfortunate death you get Sum Assured or Fund value whichever is higher
Lump sum Injection allowed. Minimum amount of LSI - Rs. 10,000/-
Flexibility to switch from one fund to another by filling “switch form”, No charges to be paid for switching & No restrictions on number of switches during the policy term.
Loan will be available on 50% of surrender value only after the 1st year of policy.
KOTAK GRAMIN BIMA YOJANA
Life is about change an and d you will want to be prepared for it. At OM Kotak Mahindra, we understand your need to protect your loved ones and to provide for a financially independent future. Presenting the Kotak Gramin Bima Yojana, a plan that takes protects your loved ones against uncertainties and provides you with guaranteed returns, just like your fixed deposit.
The Kotak Gramin Bima Yojana The Kotak Gramin Bima Yojana is an insurance plan that not only covers your life but also ensures that your money works hard for you and an d generates returns. The plan lets you pay a one-time premium so you are saved the bother of remembering to make annual payments.
What are the advantages of this plan?
The Kotak Gramin Bima Yojana combines the benefits of a fixed deposit and an
insurance plan. Easy one-time premium payments. Guaranteed returns on maturity of the plan. Increasing death benefit cover. No medical tests required. 15 day free-look period.
Are there any tax benefit? Yes, the premiums paid under the plan will qualify for a deduction under Sec.80C and the maturity proceeds are fully exempt under Sec 10(10 1 0(10 D).
KOTAK TERM PLAN
"What is Kotak Term Plan?"
Kotak Term Plan is a pure risk product that aims to cover your life at a nominal cost. You may want to take this plan to cover your outstanding debts like a mortgage, a home loan etc. Since this is a pure risk cover product, there are no maturity benefits payables on survival. This is a non-participating plan.
"What value-adds can you opt for?"
You may avail of the following non-participating value-adds for a nominal premium at the time of taking your policy, subject to aggregate premium on all value-adds (except Critical Illness Benefit) not exceeding 30% of the basic Kotak Term Plan premium.
What value-ads can opt for? Accident Death Benefit Premium Disability Benefit Critical Illness Benefit.
KOTAK RETIREMENT INCOME PLAN
“What is the Kotak Retirement Income Plan?" Thee Kota Th Kotak k Reti Retire reme ment nt Inco Income me Plan Plan is a savi saving ngss plan plan desig designe ned d to meet meet your your post post-retirement needs. It is a plan that gives you "Jeene ki azaadi". It gives you the choice to remain independent even after retirement.
The Kotak Retirement Income Plan is a participating plan. The plan comes in two forms: (i) With Cover (ii) Without Cover.
"What are the advantages of this plan?" You can choose to retire at any age between 45 yrs and 65 yrs.
On Retirement:
You may take a lump sum in cash of up to a third of your Basic Sum Assured or Accumulation Account*, whichever is higher; and the balance of the benefit you are eligible for will be used to buy an annuity of your choice.
Annuity Options: You may buy an annuity either from Kotak Life Insurance (subject to the choice and rates available at that time)**, or from any other insurer.
Early Retirement Benefits: You may opt to retire early, i.e. at any an y age before the normal retirement date (subject to the policy being in force for 3 years or your attaining a minimum age of 45 yrs, whichever is later). You can then secure benefits with your Accumulation Account, net of an early retirement charge of 5%. If the early retirement is due to ill health, then you may retire before attaining the age of 45. You can then secure benefits with your full Accumulation Account.
Late Retirement Benefits: You may opt to retire after the retirement date originally selected, and select a new retirement date (subject to a maximum of 65 years). No further premiums will be payable and the death benefit will be equal to the balance in Accumulation Account. (However, all riders will cease at the original retirement date).
You can make lump-sum injections into your policy at any time before
retirement (such lump-sum injections during a year may not exceed 25% of the Basic Sum Assured). A Supplementary Accumulation Account will be created for this, and will be paid out in the same manner as other benefits.
You may exercise the option of o f paying premiums from the Supplementary
Accumulation Account, created for "lump-sum injections", if the need arises. For a "With Cover" plan, you have the facility of Automatic Cover Maintenance, which ensures that the cover remains in force even when you miss the premium p remium payments. This facility is available after the first three years of the term.
You have the option of paying premiums in quarterly, half-yearly or yearly installments.
You have the facility of a 15-day free look period.
LIFE ADVISER
Life Advisor at Kotak Life Insurance
Introduction The Life Adviser is the most critical link
between OM Kotak Mahindra Life Insurance Company Ltd. and the insuring public. A Life Advisor with the required amount of
knowledge and training and a high sense of responsibility and service brings honor to the profession and the company. The success of a Life Advisor will be depend
on three factors.
One is his knowledge of what is life insurance, what it does and how it can meet the needs of the client.
The second factor is his knowledge about OM Kotak Mahindra Life Insurance Company Ltd. it’s products and how the company meets the varied of the client.
The third is his knowledge of the client’s needs.
FUNCTION OF LIFE ADVISOR
Life Advisor is the first & important person in close association with the person while procuring & servicing of life insurance business.
The insurance Act, 1938 under it’s Section 2 (10) Insurance Life Advisor as “Insurance Life Advisor” means an insurance agent licensed under section 42 of above Act who receives or agrees to receive payment by way of commission or other other remuner remunerati ation on in consid considera eratio tion n of his solici soliciti ting ng or procur procuring ing insura insurance nce business including business relating to continuance, renewal or revival of policy of insurances.
Any Insurance Life Advisor has two basic tasks namely –
Procure new life assurance business &
Conserve the business already secure
HUMAN RESOURCE DEPARTMENTS
TRANING AND DEVELOPMENT CENTRE:In view of the rapid growth of business and fast expanding cadre of management at all levels. Kotak Life Insurance has set up a separate Management Development Department from the new financial year.
The major goal of this department is to train develop and monitor the existing and future managers with a view to continuously enhancing their competencies, capabilities and potential for achieving corporate objectives. Headed by Arun Patil (Vice President – Sales and Management Development) with his 25 years of Life Insurance industry experience, and assisted by three facilitators, this Group will roll out different learning tracks for Sales Managers, Branch Managers, Area and Regional Managers abd other managers of the company.
Believing the maximum that people are the greatest assets of any company, this new meas measur uree by Kotak Kotak Life Life Insu Insura rance nce woul would d go a long long way way in crea creati ting ng an exce excell llen entt organization.
TRANING AT RAJKOT BRANCH Mr. Mitesh Pathak is a branch trainer at Kotak Life Insurance Rajkot branch. He is also a trainer for all Saurashtra branch of Kotak Life Insurance. He is B.Com graduate & also M.B.A. from Sikkim Manipal University. He is handling training program for IRDA and also handling 4 days product training.
Organization Organization structure of H.R. Department
Managing Director
Vice President
Asst. Vice President
Senior Manager
Manager
Senior Executives
Executive
Recruitment and Selection at Kotak Life Insurance 1. Operat Operating ing Depar Departme tment: nt:-Requirement Requirement and selection in operating department is in hierarchy from. First Branch Head will take interview and then, Area Branch Manager approval will come and then finally the interview will be taken by HR Head or HR Manager. If he approves the candidate is selected.
2
Training Department
Selection of trainee for any branch of Kotak Life Insurance is centralized. According to the requirement of any branch, the head office selects a trainee or transfers any trainee to that branch.
3
Sales Department
Selection of any sales manager is mostly done in a local way, but final approval is given by HR Department: To select a suitable candidate they mostly use personal contact like relative, friends, etc. First interview is taken by senior sales manager and after that if Branch Manager approves the candidate then appointment Letter is issued by HR Department. HR Department maintains records of Legal paper of any appointment of each employee of different department. Records of performance of each employee are also maintained by HR department.
Refreshment program at Kotak life insurance Refreshment program is conducted each branch individually. Each branch arranges picnic, movie shows, and parties as and when they are required.
On this 17th May, 2006 Kotak Life Insurance has completed 5 years in incurrence sector, so they had arranged a party for all the employees and life advisors at respective branch :
Here at Rajkot branch they arrange a small party once in two months for their employees. So in this way Kotak Life Insurance is providing homely atmosphere to all the employees so that they all can work like a family and try to get best from each of them. .
MARKETING DEPARTMENT
Marketing Yesterday and Today
Today Today the definitio definition n of market marketing ing has been changed changed.. The market marketing ing activi activity ty of an organization before the product is produced and continues even after the product is sold. In the buyer market of recent times the sharpest weapon that a company can develop is globalize marketing place in the value creation and delivery. The proud and demanding customer of today brings before corporate a critical fact, when the customer is jury. It is the value generation for the customer that will separate the victor from vanquished. The value of customer service cascades all over the company. The aim of customer focus is not just satisfaction but delight satisfaction.
Till the year 1999 the life insurance business was exclusively conducted by the Life Insurance Corporation (LIC) while the general insurance business in India, was exclusive by General Insurance Corporation and its four subsidiaries. The insurance sector is opened for private participation since November, 2000.
Before 1999 there was no marketing done by LIC due to its monopoly but now after 5 years the picture has changed. Now there are private players in market. With the effective marketing techniques the private players has changed the whole scenario of the insurance sector. They are slowly and gradually driving the business out of the hands of the LIC. Before 1999 customer had no option other then LIC, but now they have got many options.
This is the significant change in insurance industry. Now the customer is back in the center state. All the companies are trying to please the customer with the innovative schemes and better service.
Relationship Marketing in Insurance Introduction
It is five times more expensive to acquire a new customer than to retain an old one.
Relationship marketing is the practice of building long term satisfying relationship with key parties customers and suppliers. They accomplish this by promoting and delivering high high qualit quality, y, goods, goods, servic services, es, and fair fair prices prices to other other partie partiess overvie overview. w. Relati Relations onship hip marketing results in strong economic, technical and social ties among the parties.
Definition of Relation Marketing : Relationship marketing can be defined as the “process to identify, establish, maintain and other stakeholders at a profit so that the objective of all parties involved are net and this is done by mutual exchange and fulfillment of promises.
The important objectives of relationship marketing to acquire new customers maintain and enhance relationship with existing customers, re-activities of ex-customers and handling of customer terminations. The key objective of relationship marketing is to establish one to one relationship with all the customers. This may have sound like a day dream few
dream few years ago but thanks to the technological breakthrough and technological solution providers, it is very much of a reality.
How to add value through relationship Marketing
Identify loyal customers
Recognize their special needs
Provide special reward for loyalty
Establish continuing relationship
Ensure increase in customer value
Relat Relation ionshi ship p mark marketi eting ng is one of the hottes hottestt tread tread in the prese present nt marke marketin ting g scenario. Satisfied customers not only stay with a company but they are also walking talking advertisement for the company’s product.
FINANCIAL INFORMATION KOTAK MAHINDRA BANK ANNOUNCES RESULTS FOR FY06 Consolidated net profit (before extraordinary item) up 100% to Rs. 342.5 crore Mumbai, May 15, 2006: The Board of Directors of Kotak Mahindra Bank took on Record the unedited consolidated and audited stand-alone results for FY06, at a board Meeting held in Mumbai, today. Unedited consolidated results
Consolidated profit after tax (PAT) for Q4FY06 was up 104% to Rs. 130.8 crores as Compared to Rs. 64.3 crores (quarter ended March 31, 2005). The above PAT excludes the Bank’s consolidated share of profit after tax of Rs. 387.3 Crores on sale of 3.2% effective economic interest in Hutchison Essay Limited (Hutch) by The Bank’s subsidiaries and associates in March 2006. Consolidated PAT (including stake sale in Hutch) for Q4FY06 was Rs. 518.1 crores.
Consolidated PAT (excluding stake sale in Hutch) for FY06 was up 100% to Rs. 342.5 Crores vis-à-vis Rs. 170.9 crores for FY05. Consolidated PAT (including stake sale in Hutch) for FY06 was Rs. 729.8 crores.
Consolidated total income for FY06 (excluding stake sale in Hutch) was up 67% to Rs. 2,854.1 crore as compared to Rs. 1,711.5 crore in FY05. Consolidated total income for FY06 (including stake sale in Hutch) was Rs. 2,980.7 crore.
During FY06, consolidated fee income (including life insurance premium) increased 71% to Rs. 1,471.7 crore from Rs. 859.0 crore in FY05. Significant contributors to the growth in revenue revenuess were were securi securitie tiess brokin broking g income income,, fees fees from from invest investmen mentt bankin banking, g, fees fees on distribution of financial products and premium income from life insurance b usiness.
Consolidated advances were up 46% to Rs. 10,421.4 crore as on March 31, 2006 (Rs. 7,144.7 crore as on March 31, 2005) with retail loans comprising 87% of the portfolio. Consolidated net NPAs as on March 31, 2006 were 0.23% of consolidated net Advances (0.28% as on March 31, 2005).
Consolidated net interest margins for FY06 were 5.1% (5.3% in FY05). Consolidated book value per share as on March 31, 2006 was Rs. 72.7 (Rs. 47.6 as on March 31, 2005) after adjusting for the 3:2 bonus issues in August 2005.
In April 2006, the Bank successfully raised Rs. 450.0 crore (approximately US$ 100 millio million) n) through through issue issue of 1,50,00 1,50,00,000 ,000 Global Global Deposi Depositor tory y Shares Shares (GDS) (GDS).. Each Each GDS represents one underlying equity share of Rs. 10 each. The GDS issue will increase the consolidated book value per share by Rs. 10.5 to Rs. 83.2.
Announcing the results, Uday Kotak, Executive Vice Chairman & Managing Director, Kotak Mahindra Bank said, “We have completed three years as a commercial bank. Our results reflect the strength of an integrated business model. Strong foundations are in place to build a world class financial institution from India .”
Audited Bank stand-alone results.
The PAT of Kotak Mahindra Bank on a stand-alone basis for Q4FY06 grew by 50% to Rs 34.7 crore as compared to Rs. 23.1 crore in Q4FY05. PAT for FY06 was Rs. 118.2 crore, up 39% from Rs. 84.9 crore in FY05.
Net Interest Income (NII) of the Bank for Q4FY06 was Rs. 108.2 crore, up 61% from Rs. 67.3 crore in Q4FY05. Other income of the Bank for Q4FY06 increased by 75% YoY to Rs. 85.1 crore . NII of the Bank for FY06 was Rs. 354.9 crore, up 57% from Rs. 225.5 crore in FY05. Other income of the Bank for FY06 was Rs. 242.9 crore as compared to Rs. 132.4 crore in FY05.
The Bank had 65 full-fledged branches across 43 towns and cities in India as on March 31, 2006. The Bank proposes to have around 110 branches by March 2007 across 65 towns and cities.
As on March 31, 2006, the deposits of the Bank were Rs. 6,565.9 crore up 53% as compared to Rs. 4,299.5 crore as on March 31, 2005. The Bank had around 1,68,200 deposit accounts as on March 31, 2006 (66,400 deposit accounts as on March 31,2005). Advances of the Bank grew by 58% YoY to Rs. 6,348.5 crore as on March 31, 2006. Capital adequacy ratio of the Bank as on March 31, 2006 was 11.27% (12.80% as on March 31, 2005).
The Board has declared a dividend of 6% for 2005-06 on the expanded capital post the 3:2 bonus issue in August 2005 and the GDS issue in April 2006 (equivalent to 5% in the previous year after adjusting for the bonus issue in August 2005).
Suggestion
Advertiseme Advertisement nt through through “solo “solo exhibitions exhibitions”, ”, fairs fairs and festivals and should be done to spread the message of Life Insurance.
Do more and more advertisement in rural areas arranging exhibitions, participation in fairs and festivals, rural wall paintings and publicity driven through the mobile publicity van.
The segment of industries is still not tapped for LA’s. Not the commission but the recogni recognitio tion n and associ associati ation on of their their name name with with profes professio sional nal organi organizat zation ion like like Kotak Group attract them.
More and more advertisement needs to stand in competitive world, use Radio and Television for advertisement. Radio for the rural area. So they are also able to understand Life Insurance.
Give sponsorship to any event so that young generation can be attracted and make them aware about Kotak Group.
Plan out some policies to the totally untouched market like HIV infected people.
There should be some more motivational factor for LA.
SWOT Analysis
Strength
Well recognized and trusted brand of Kotak
Experienced of Old Mutual
Young and well qualified staff.
Well aware of customer’s need.
Good in relationship building
Know about their true and potential customer
Weakness
Presence of Government undertaking like LIC
Less Advertisement
There are so many untapped area.
Oppor
tunities
Overseas Market
Increasing preference in rural market.
Increasing awareness about insurance in public
Increase contact around the world
Take rural market and untapped market.
Threats
Increase in the number of private life insurance players as a big
portion.
Increasing competition.
Conclusion
At the end of this project, I PARESH M.HADIYA would like to conclude by wishing the company all the very best for its future.
With the fact that still more then 70% market is yet to be covered, thus Kotak Life Insurance has wide scope to sustain in the market and the brand name Kotak will also provide boost to the Kotak Life Insurance.
Kotak Life Insurance is well aware of the changing environment and thus has a bright future ahead.
Bibliography Books Marketing Management
Philip Kotler
Indian Institution of Bankers
(Volume – Three of Life and Non Life Insurance)
Outlook Money
Websites
www. Kotak .com www. Kotak LifeInsurance.com www. IRDAIndia .com www. Google .com
